South Florida’s industrial market — believed to be resilient to coronavirus as demand for distribution space and cold storage grows with online shopping — did show some signs of weakness in the third quarter, according to a newly released report.
In Palm Beach County, 350,000 square feet of industrial space was leased in the third quarter, compared to 500,000 square feet in the second quarter, according to the report from Colliers International.
Miami-Dade County’s leased space was on par with that of the second quarter, but compared to the same period last year, 1 million square feet less space was leased. And the county’s manufacturing and warehouse facilities saw the lowest asking rents since the fourth quarter of 2017, according to the report.
Still, some bright spots for landlords appeared in the region’s industrial activity. Broward County saw record high asking rents in manufacturing and flex space. Palm Beach County saw record highs in flex space and warehouse asking rents.
Here are other insights from the report:
Most of the construction in the region was in Miami-Dade, with 3.7 million square feet of industrial space. Most of that — 2.5 million square feet — was in the Medley area.
Miami-Dade County saw the largest negative absorption rate in the region, with 1.2 million square feet in the third quarter. The county saw a positive absorption of 223,000 square feet the prior quarter, and positive absorption of 456,000 square feet in the third quarter of 2019.
Miami-Dade’s vacancy rate was 6 percent, compared to 5.3 percent in the second quarter, and 4.2 percent in the third quarter of 2019.
For warehouses, the average asking rent dropped to $9.70 per square foot in the third quarter. The prior quarter saw an average of $9.87 per square foot. Rent in the third quarter of 2019 was $10.41 per square foot.
For manufacturing space, the asking rent fell to $8.25 per square foot, compared to $8.72 in the second quarter and $8.50 in the third quarter of 2019.
The county had the highest asking rates in the region for flex space, at $19.10 per square foot. That was a decrease compared to the prior quarter, at $20.19 per square foot, but higher than the same period a year ago, of $18.76 per square foot.
The largest manufacturing average asking rate in the county was in South Dade at $12.84 a square foot. The lowest was in the Miami Lakes area, at $7.65 a square foot.
In Miami-Dade, three of the largest leases signed during the quarter were for warehouses. The other two were for a flex space and a distribution facility. DHL signed the largest lease at 201,000 square feet at Miami International Commerce Center. Monat signed a 200,000-square-foot lease for International Corporate Park South. Intcomex signed a 161,000-square-foot lease at Miami 27 Business Park. Chef’s Warehouse signed a 150,000-square-foot lease at 14300 Northwest 57th Avenue, Miami Lakes. Schenker signed a 150,000-square-foot lease for Beacon Lakes Building A.
Miami-Dade and Broward’s largest industrial deal was the $94 million Elion Partners sale to Blackstone for properties in both counties.
Broward saw the highest overall industrial vacancy rate among the three counties at 7.4 percent, a record high since the second quarter of 2016. The largest vacancy rate in the county was for Northwest Broward warehousing at 13.4 percent. Southwest Broward saw no vacancy among its 13 manufacturing facilities.
The lowest warehouse and flex space rents in the region were in Broward, at $9.21 per square foot and $13.62 per square foot, respectively. The highest warehouse rent in the county was $11.48 per square foot in central Broward. The lowest was $7.87 per square foot in northwest Broward.
Broward’s flex rent reached a record high since at least the second quarter of 2016. Rent in the second quarter was $13.42 per square foot, and $13.04 per square foot in the third quarter of 2019. The highest average flex asking rent was in southwest Broward, at $14.47 a square foot. The lowest was in northwest Broward, at $12 per square foot
In Broward, four of the largest leases signed were for warehouses. One was for flex space. International Warehouse signed the largest lease of the quarter for 145,000 square feet at Port Everglades International Logistics Center.
Other top leases included U.S. Cabinet Depot signing 103,000 square feet at Sawgrass Commerce Center, Group III International signing 98,000 square feet at Pompano Business Center G, Ferguson Enterprises signing 57,000 square feet at Coral Spring Commerce Center and United Hardware Supply signing 30,000 square feet at Hollywood Design & Distribution Center.
Palm Beach County
Palm Beach County saw the smallest overall vacancy rate among the three counties, at 3.9 percent.
The highest warehouse vacancy rate was 4.9 percent in south Palm Beach County. The lowest warehouse vacancy rate was 3.3 percent in outlying Palm Beach County.
The largest manufacturing vacancy rate was 4 percent in outlying Palm Beach County. North Palm Beach saw no vacancy during the quarter, but it’s only home to four manufacturing buildings.
The largest flex vacancy rate was 6.2 percent in central Palm Beach. The smallest flex vacancy rate was 4.1 percent in South Palm Beach.
Palm Beach was also the only county to see a positive absorption rate at 145,000 square feet. Last quarter, the county saw a negative absorption of 41,000 square feet. The county saw a negative absorption of 501,000 square feet during the third quarter of last year.
Palm Beach County had the highest asking rents in South Florida for warehouses and manufacturing facilities at $9.28 a square foot and $9.11 a square foot, respectively.
Palm Beach’s warehouse rent set a new second since at least the second quarter of 2016. The rent was $9.23 per square foot in the second quarter, and $9.06 per square foot in the third quarter of 2019.
Palm Beach is home to the least amount of new industrial construction at 1 million square feet. Most of the construction is in central Palm Beach, with 550,000 square feet of warehouse space.
In Palm Beach County, all five of the largest leases signed were new. The county’s largest lease was 52,000 square feet for Fun Sweets at 501 103rd Avenue. The other top leases were Shyft Group signing 35,000 square feet at Palm Beach Park of Commerce, IM Management signing 24,000 square feet at International Corporate Center II, Palm Beach Laundry and Linen Service signing 21,000 square feet of space at Interstate Industrial Park, and Florida Department of Health signing 20,000 square feet at Airport Logistics Park.
In August, SunTrust Equity Funding paid $21.8 million for land leased to Amazon within the Palm Beach Park of Commerce.
Palm Beach County’s largest sale in the quarter was the $51 million Oak Street Real Estate Capital deal at the Park at Broken Sound.